are skilled in store operations.”  Part of Muji’s interest in Southeast Asia stems from its struggles in China, where, like many other international retailers, it is facing macro headwinds. Muji has 611 stores in Japan and 664 overseas. Of the overseas contingent, 102 are located in the Southeast Asia and Oceania region, with the company accelerating openings in Thailand, Malaysia and Vietnam. Inside Retail recently visited two of the new stores in Thailand to get a sense of where Muji was going in terms of store design and merchandising for separate and distinct markets outside Japan. The stores were nearly 600 kilometers apart, one of them a large expansion of an existing store in the glitzy Siam Discovery mall in downtown Bangkok, and the other a smaller unit just opened in Central Udon, the only mall in the provincial capital of Udon Thani in the poorer northeast of the country. Expectations were obviously different for the two stores, as the income levels and domestic customer/tourist mix are so different in the two markets. Siam Discovery, on a key transport hub in downtown Bangkok, hosts a rich blend of affluent professionals and international tourists, while the Udon unit depends a lot on aspirational local consumers with a stretched budget when it comes to imported merchandise in a modern retail setting. The surprising thing was that the store in Udon Thani was, incrementally, a better addition to the mall than the one in Siam Discovery. Muji in Siam Discovery Muji already has stores in Central Retail’s Central World and Central Chidlom, both in downtown Bangkok in the immediate vicinity of Siam Discovery. It also has a branch in EmQuartier, operated by The Mall Group, about five kilometers to the east. The store in Siam Piwat’s Siam Discovery is a renovated and expanded version of an existing one. It is located on the second floor of a mall that justly prides itself on being a showcase for Japanese design brilliance. The mall design is by Oki Sato, founder of the globally renowned firm Nendo. A number of the retailers are Japanese imports, including Loft, a sumptuous lifestyle product store, and Moleskine, a stationery brand. In this rarefied atmosphere that pushes color, exotica and hipness before mainstream fashion, Muji looks slightly out of place. It seems to belong more in the two Central Retail locations and EmQuartier, where it can just be itself without having to pull off something special. It’s doubtful whether this sprawling, 1300-meter effort achieves ‘specialness’, but it is still a satisfying, familiar and shoppable addition to a site that can in some ways strike the visitor as being more of a design museum than a shopping mall.  While the mall itself, and many of the retailers and brands, vibrate with color and have unique viewpoints, Muji’s earth color tones come over as slightly dull and downbeat, even if the merchandise itself is well differentiated and functional. The products – of which there are about 5000 – span the customary slew of lifestyle categories from apparel, footwear, home furnishings, health and beauty to food. But there are no surprises and it can leave the visitor itching for the color and dynamism that flavors the rest of the mall. Excitement in the provinces How did Muji do in Udon Thani, more than 600 kilometers away in a completely different demographic?  The edited, two-level store at Central Udon, is a delightful addition to an already excellent mall and arguably brings a lot more excitement to the local shopper than the Siam Discovery flagship does for its more affluent and tourist-oriented market. The Udon store, being on two levels rather than one, feels more compact and the monochromatic quality of the merchandise is less dulling. It is also cheek-by-jowl with a two-level Uniqlo, so the local shopper can enjoy a rich variety of Japanese products in a compact area. (Thais seem to love everything Japanese, from apparel, to home furnishings, to food.) The merchandising range at Muji is still there, with men’s and women’s apparel and footwear on the lower level, and kids, home furnishings, and health and beauty upstairs. The contrasting impressions left by the two stores emphasize that context is meaningful no matter how good the retailer is. While Muji is spot on for the underexposed secondary market consumer, and for straight-up fashion malls like Central World, it needs to adapt itself more profoundly for iconic locations like Siam Discovery. Muji’s store growth is driving revenues and profit Meanwhile, back home in Japan, Muji’s most recent sales growth has been patchy, particularly in the apparel category. For the first 11 months of the financial year, ending July, apparel sales barely moved above the comparable period a year ago, while household goods achieved 10 per cent-plus growth. The company has stated that recent problems with apparel sales are partly attributable to a shortage of summer inventory. In mainland China, where the company has opened a net 40 stores in the first nine months of its fiscal year to clock up 520 units, sales have struggled for Muji, as they have tended to do for everyone else in recent times. Like-for-like sales are down almost 2 per cent on the comparable nine-month period ending June last year. In Southeast Asia/Oceania, of which Thailand is part, sales have increased more than 15 per cent on the back of openings, but like-for-like sales have flatlined. Still, it is important to bear in mind the overall economic landscape, with consumers becoming more conservative, trading down in brands and shifting spending away from discretionary goods. This is a cyclical issue for Muji and not an underlying structural weakness. For the nine months ending May 31, company operating revenue grew by 13.7 per cent, to 495.7 billion yen, while net income grew by 79.4 per cent, to 33.5 billion yen.